Mr. Goldstein also has secured $2.5 million in equity and $25 million in debt financing from Chicago-based alternative investment firm Victory Park Capital. AvantCredit, which hopes to generate $50 million of loans this year, so far has lent $3 million. It employs 23 and could have as many as 100 employees in Chicago by year-end, he says.

In the next five years, the firm hopes to build a loan portfolio between $1 billion and $2 billion.

Mr. Goldstein and his team of 20-something execs at AvantCredit, recruited mainly from Chicago-based Enova, see untold demand for credit among middle-class households with credit ratings just below prime. That population, aggressively served in the past by credit card companies and brick-and-mortar lenders like Prospect Heights-based Household Finance Corp., today is lacking as many loan sources.

“In the subprime space, there's been a lot of innovation,” Mr. Goldstein says. “There really hasn't been in the near-prime space.”

Analysts who follow companies offering unsecured installment loans to consumers say Mr. Goldstein is right to think that demand for those loans is outstripping supply. “At the end of the day, the credit card companies aren't serving customers in that segment,” says John Hecht, an analyst at investment banking firm Stephens Inc. in San Francisco. “The large installment loans—there's been tremendous demand for them.”

YOUNG ENTREPRENEUR

Mr. Goldstein's track record was key to securing $10 million from Menlo Park, Calif.-based August Capital to launch AvantCredit. Born in Uzbekistan, Mr. Goldstein started his first business, an online payday loan outfit then called CashNetUSA, at age 23. He invested part of the $70 million he cleared after selling it into creating Pangea Properties, a real estate investment trust that's grown to more than 8,000 apartments in low-income neighborhoods of Chicago, Indianapolis and Baltimore.

Co-founder John Sun, whom Mr. Goldstein lured from Enova to run AvantCredit day to day along with co-founder Paul Zhang, says the company is targeting middle-income households with credit scores between 620 and 720—just below prime. Circumstances that cause consumers to register below-prime credit scores include not paying bills or making late payments, selling a home at a price below its mortgage or having a limited credit history.

Interest rates range from 35 percent to 95 percent a year depending on where borrowers fall on that credit spectrum. Loans are payable over one to three years.

Still, AvantCredit is no sure thing. There are significant risks in making large loans over the Web. One is the need to give consumers a quick and easy way to apply for loans while determining whether they will repay them. Another is getting repaid. Unlike payday lenders that automatically withdraw payments from customers' bank accounts, borrowers using AvantCredit make monthly payments, online or via the U.S. mail if they wish, just as they would with a bank.

AvantCredit is putting its faith in its ability to quickly access all kinds of public information about an applicant and crunch numbers to get a reliable gauge on how likely a person will be to pay back the money.

“Fraud is a huge risk,” Mr. Goldstein acknowledges. “You're not seeing a customer face to face.”

A potentially bigger risk is one that ultimately forced Household in 2003 to sell for cheap to London-based banking giant HSBC Holdings PLC: loss of financing. (Six years later, HSBC exited Household's branch-based lending business after suffering punishing losses.) Once non-bank lenders like AvantCredit are established, they depend on loans from big banks or the public debt markets to finance their loans. Loss of confidence in a lender, for whatever reason, quickly can jeopardize future funding.

“It's going to depend on performance,” says W. Eric Carlborg, general partner at August Capital. “If the business continues to grow, we're going to continue to be substantial investors.”

(Editor's note: The story has been updated with financial details of the new company.)

April 25, 2013

Mavenir wins two IMS Industry Awards for Voice over LTE and RCS 5 Solutions and Launches

Mavenir's Convergence TAS is Best VoLTE Product

BARCELONA, Spain, April 25, 2013 /PRNewswire via COMTEX/ -- Mavenir Systems, a leading provider of software-based networking solutions, today announced that it had won two awards for its Voice over LTE (VoLTE) and Rich Communication Services (RCS) Solutions. The company picked-up the awards for "Most Innovative Service Launch by IMS" and 'Best VoLTE Product' in the prestigious Informa Industry Awards held at the 2013 IMS World Forum in Barcelona.

The world's first launches of VoLTE and RCS 5 services with Mavenir's suite of RCS 5 application servers were recognized as 'Most Innovative Service Launch enabled by IMS'. Both launches were with MetroPCS including the VoLTE launch in August 2012 and the RCS 5 launch, only 90 days later, in October 2012.

Mavenir's 'Best VoLTE Product' award for the Convergence Telephony Application Server (TAS) that enables the transformation of mobile networks to all-IP LTE. As part of a highly integrated E2E solution, Mavenir's TAS is uniquely equipped to offer service parity and synchronization with the circuit switched network so operators can quickly and easily integrate new services while saving costs. It can be deployed in a standalone configuration with any 3rd party IMS core or bundled with Mavenir's IMS solutions to offer a cost-effective end-to-end IMS voice service.

"As a next generation player, we are very pleased to win not one, but two awards, especially against the traditional vendors," said Ian Maclean, Mavenir's Vice President of Strategy and Marketing, who received the awards. "Mobile operators worldwide have selected Mavenir for our innovation and leadership in the market so it was an honor to be recognized in front of many of them."

Mavenir's suite of application servers and recently announced Virtualized IMS solutions, including the Telephony Application Server, Presence Server, Content Server and Rich Messaging Server, are based on the mOne� Convergence Platform and are specifically designed to simplify mobile operators' network transformations.

About Mavenir:

Mavenir is a leading provider of software-based communications solutions that enable mobile service providers to deliver high-quality internet protocol (IP)-based voice, video, rich communication and enhanced messaging services to their subscribers globally. Mavenir's mOne� software platform has enabled leading mobile service providers to introduce the industry's first live network deployment of Voice-Over-LTE (VoLTE) and the industry's first live deployment of next-generation Rich Communication Services 5.0 (RCS). Our solutions deliver next-generation services such as RCS, VoLTE and Voice over Wi-Fi (VoWi-Fi) over existing 2G and 3G networks and next-generation 4G LTE networks. www.mavenir.com